ECON QUIZ 4

If a video game generates $10,000 in profit on total revenue of $30,000, what was the game's total cost?

$20,000

Consumer preferences are commonly impacted by new technology, as well as by health and __________ concerns.

environmental

According to Economics in One Lesson, minimum wage laws are a(n) ________ weapon for combating low wages.

limited

An activist who attempts to persuade politicians to vote for legislation that benefits their group is a _________.

lobbyist

According to Hazlitt, which of the following are functions of profit?

to put constant pressure on businesses to become more efficient to guide and channel the factors of production

If a lemonade stand generates $100 in total revenue with $50 in total cost, what is its profit?

$50

How much of the total national income of the United States is made up of corporate profits?

6.6%

According to the lesson about profit, why is raspberry soda much harder to find than cherry soda?

As a whole, consumers are more likely to buy cherry soda than raspberry soda.

Which of the following are possible effects of restricting the output of a particular good or service?

Consumers are able to enjoy less of that product. Consumers have less to spend on other products.

Which of the following are true about utility?

In economics, we assume that consumers act as if they can measure utility. Each individual gets a different amount of utility from the same product.

During World War II, the American government established a rationing system to counteract the shortages caused by fixing maximum prices. Why is rationing only partly effective in counteracting these shortages?

It only limits the demand without also stimulating the supply.

What two choices does a company have when production costs rise?

The company can increase their prices. The company can accept lower profits.

If there is no profit in making a product, it's a sign of what?

The labor and capital devoted to its production are misdirected.

According to Economics in One Lesson, what is the consequence of limiting the profits of those who make essential commodities, but not limiting the profits of those who make luxuries or semi-luxuries?

The production of the price-controlled essential commodities is discouraged.

Which of the following are consequences of holding the price of a product below its market level?

The supply of that commodity will be reduced. The demand for that commodity will increase. Marginal producers will be driven out of business.

If the equilibrium price of corn is $4.00, but the government establishes a minimum market price of $5.00, what will happen?

There will be a surplus of corn.

Which of the following might be incentives for savers to put their money in a savings account?

They feel their money is safer in the bank. Having their money in a separate account lessens their desire to spend the money.

According to Economics in One Lesson, what will happen if the government sets a minimum price for a product but doesn't restrict its output?

Unsold surpluses of the product will pile up until the market collapses.

A restriction on total spending is called a _________ constraint.

budget

Rent control is an example of a price __________.

ceiling

In a market economy, who is primarily responsible for deciding what goods and services will be produced?

consumers

Consumers can discourage production of a particular product by casting their ______ votes elsewhere.

dollar

Rewards like wealth, fame, or praise are examples of _________ incentives.

extrinsic

What is an incentive for savers that banks have some control over?

high interest rate

In a competitive market economy, who is driven out of business by a fall in price?

inefficient producers

Utility is _____________.

inherently unmeasurable

Personal satisfaction is a(n) __________ incentive.

intrinsic

A penalty that discourages a behavior is a(n) ________ incentive.

negative

A reward or other enticement that encourages a behavior is a(n) _______ incentive.

positive

A government policy that sets the highest price that can be charged for a good or service is a __________.

price ceiling

According to Hazlitt, "Real wages come out of _________, not out of government decrees."

production

The amount of money remaining when all costs are subtracted from revenues is called _______.

profit

What is a capital gain?

profit made from the sale of an investment such as stock or real estate

Two benefits usually given to full-time employees are health insurance and ___________.

retirement plans

The income generated by the sale of goods and services is called ________.

revenue

Utility is the __________ consumers get from goods and services.

satisfaction

The real cause of rising prices is a ___________ of goods or a ____________ of money.

scarcity, surplus

According to Economics in One Lesson, who mostly bore the risks of fluctuating farm prices at that time?

speculators

In Economics in One Lesson, Hazlitt argues, "There is no escape from the conclusion that the minimum wage will increase ___________."

unemployment

Henry Hazlitt argues that in situations where workers are being paid below their market worth, the situation should be remedied not by a minimum wage, but instead by __________.

unionization

According to the lesson on consumer choice, the goal of all consumers is to maximize _________.

utility